Where Legal Compliance Meets Business Success
Your Path to Financial Success Starts Here
Our expert team is here to guide you every step of the way, helping you navigate the complexities of personal finance.
Book a MeetingNeed Help?
Social Networks
Home / GST Category
Private Limited Company Compliance
"GST registration is essential for legal business operations and unlocking tax benefits."
Enquiry for Private Limited Company Compliance
Private Limited Company Compliance
Annual private limited company compliance is basically like a checklist of stuff that a private limited company needs to do every year to stay on the right side of the law. It’s a bit like making sure all your ducks are in a row so you don’t get into trouble with the authorities. There's a bunch of things involved, like filing annual returns, maintaining correct records, and ensuring all the financial statements are up to scratch. You also need to meet up with your shareholders at least once every year; it’s a good chance to go over what’s been happening in the company and plan for what's next. Plus, keeping track of things like taxes and any changes in business structure is super important. It's essentially all about keeping everything above board and making sure the company is running smoothly without any hitches.
What are the Advantages of Indian Private Limited Company Compliance?
Helps in attracting investors:
When it comes to investors, compliance and financial records are the primary areas of attention. Investors use the MCA portal to verify whether your company files annual returns on a regular basis before making an investment. Therefore, obtaining investors requires regular filing of Private Limited Company Compliance.
Helps in keeping your business operational:
A Private Limited Company must file its annual compliance on time in order to avoid fines for accounting services. Not filing could potentially lower the company's or business's standing. In addition, the company will be taken out of ROC and deemed "in-operational." Directors of such companies are prohibited from participating in any future Indian commercial ventures.
Helps in keeping your business operational:
A Private Limited Company must file its annual compliance on time in order to avoid fines for accounting services. Not filing could potentially lower the company's or business's standing. In addition, the company will be taken out of ROC and deemed "in-operational." Directors of such companies are prohibited from participating in any future Indian commercial ventures.
Credibility
The MCA portal displays the Private Limited Company Compliance filing date. As a result, maintaining regular reporting compliance boosts your company's reputation, draws clients, aids in obtaining government tenders, and helps you get loans approved.
Offer Financial Support:
A company's finance department needs to adhere to a number of tax and accounting regulations. In addition to damages, non-compliance with such requirements can result in legal problems.
Types of Compliance for Indian Private Limited Companies
1. External Compliance
This kind of compliance refers to abiding by the laws, regulations, and standards established by the government in order to prevent any adverse effects on the company's goodwill. The state in which the company establishes trust and public relations while promoting openness in its operations. Following all the guidelines ensures that no needless effort or resource duplication occurs. External companies are further separated into two categories:
Regulatory compliances
Involves the laws and regulations that have been passed by regulatory organizations established by the federal or state governments. Below is a list of some of these:
1. Accounting and Payroll
a) Accounting
b) Payroll for Employees
2. Assurance
a) Internal Audit
b)Tax Audit
c) Statutory Audit
3. Direct Tax
a) Corporate Tax
b) Transfer Pricing
c) Withholding Tax
d) Foreign Taxation
4. Indirect Tax
a)Customs Duty
b)Goods and Services Tax (or "GST")
5. Compliance with Secretarial
a) In India, companies are required to report to the relevant Registrar of Companies and adhere to the secretarial matters listed under the Companies Act.
6. Labour Laws
a)The Provident Fund, a government-regulated Pension Plan program, has an influence that an employer must take into account.
7. Corporate Law
a) Annual Return with the ROC
b) Annual General Meeting (acceptance of financials)
c) Annual Meeting of the Corporate Law Board
8. Tax
a) Tax Audit Report
b) Transfer Price Report
c)Corporate Tax Return
d) TDS Returns (Tax Withholding)
e)Individual tax return
f) GST Return
9. Compliance
a) TDS Compliance Deposit
b) GST Compliance Deposit
II.Statutory Compliances
These are the laws and regulations that the federal or state governments have passed. The list of Statutory Rules that a company must follow is as follows:
1) Shops and Commercial Establishments Act (S&E)
2)The Employees Provident Funds and Miscellaneous Provision Act – 1952 (EPF).
3) The Employees State Insurance Corporation Act – 1948 (ESIC).
4) The Professional Tax Act (PT) 1975
5) The Labour Welfare Fund Act (LWF) 1965.
6) The Contract Labour (Regulation & Abolition) Act – 1970 (CLRA).
7)The Child Labour (Prohibition & Regulation Act), 1986
8) The Minimum Wages Act-1948
9) The Payment of Wages Act-1936
10) The Payment of Bonus Act 1965
11) The Maternity Benefit Act of 1961
12) The Payment of Gratuity Act 1972
13)The Equal Remuneration Act-1976
14) The Industrial Establishment (N&FH) Act, 1963
15) The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
16)Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013
17)The Employees Compensation Act, 1923
18)The Industrial Employment (Standing Orders) Act, 1946
19) Model Standing Order Only The Industrial Disputes Act of 1947
20) The Apprentice Act, 1961
21)The Interstate Migrant Workmen (Regulation of Employment and Conditions of Services) Act, 1979
22)The Factories Act of 1948
23)The Trade Unions Act of 1926.
2. Internal Compliance
In essence, it refers to an internally created set of guidelines that traders, clients, traders, and staff adhere to in order to preserve the calibre of services or goods provided by the business or organization. Everyone in the company abides by these, which are developed and approved by senior professionals. Creating a board of directors, holding frequent meetings, and allocating shares to shareholders are a few examples of internal compliance.
3. Mandatory Compliance for Private Limited Companies
The mandatory Private Limited Company Compliance is as follows:
First Auditor Appointment:
Within 30 days of the company's incorporation, the Board of Directors must designate an auditor. If a Private Limited Company does not designate an auditor, it will be subject to a fine. Additionally, the company won't be permitted to launch a business. He or she must remain in the office until the first annual general meeting (AGM) is over.
Subsequent Auditor:
A subsequent auditor is hired to keep an eye on a company's financial situation and fair business practices. He or she is appointed at the first AGM and remains in that role until the sixth AGM. A Subsequent Auditor is appointed by filing Form ADT-1 in accordance with the Companies Act of 2013.
AGM (Annual General Meeting)
The Annual General Meeting, or AGM, is one of the most important yearly compliance requirements for private limited companies. The company's board of directors must report the company's actual financial situation to the shareholders at the annual general meetings. Every Financial Year (F.Y.), the Annual General Meeting must be scheduled within business hours on or before September 30. Additionally, the Annual General Meeting shouldn't take place outside work hours or on public holidays. After at least 21 days of notice, it must be held at the registered office.
Board Meeting
Within 30 days or one month following its organization, the first board meeting must take place. In every fiscal year, there must be four board meetings. It should be noted that there can be no more than 120 days between two consecutive meetings. Each director must be properly notified of any board meeting declaration at least seven days prior to the scheduled meeting.
Director Disclosure
At the first board meeting of each year, all Indian private limited firms must submit Form MBP-1, which details their interest in other businesses or entities.
Financial Statement Filing
Within 30 days of the Annual General Meeting, all Private Limited Companies must file their financial statements, including the Balance Sheet and Profit & Loss Account, as well as the Director's Report, using Form AOC-4.
Filing of Annual Returns
Within 60 days of the AGM, all Indian private limited companies are required to file their annual returns. You can accomplish this by submitting MCA Form MGT-7. There is a penalty for not filing annual returns starting on the non-filing deadline.
Director KYC
In accordance with company regulations, directors who possess an active Director Identification Number (DIN) must submit a DIR-3 KYC each year. The MCA portal will display an inactive DIN status if the Director KYC is not filed. Additionally, keep in mind that if DIR-3 is deactivated, no Private Limited Company Compliance forms may be submitted.
Form DIR-8
Every Director of a Private Limited Company must file Form DIR-8 at the time of appointment to confirm that they are not ineligible to serve as a Director of the Company.
Commencement of Business Certificate
Every business must acquire this certificate within 180 days of its incorporation. if a business is unable to obtain this certification.
4. Other Private Limited Company Annual Compliance in India
Other yearly requirements for private limited companies in India are as follows:
1. Monthly, quarterly, and yearly GST returns.
2. Regular returns of TDS.
3. Preliminary tax liability calculation.
4. Filing income tax returns.
5: Filed tax audit report.
6. Filing easy returns every six months.
7: Filing returns for PF.
8. Filing tax returns professionally.
9. Evaluation and reporting of regulations by different laws (e.g., Factory Act, Competition Act, Environment and Protection Act, etc.)
5. Private Limited Company Event-Based Compliance
The list of event-based compliance requirements for private limited companies is as follows:
1. A shift in the authorized capital or paid-up capital of the business.
2. The distribution or transfer of fresh shares.
3. Lending money to other businesses.
4. Providing directors with loans
5: Selecting a managing or full-time director and paying them.
6. Upon opening or closing a bank account or when the signatories to an account change.
7. In the event that the company's statutory auditors are appointed or replaced.
- FAQ
1. What fundamental requirements must an Indian private limited company meet?
The following requirements must be met by a private limited company:
i) Annual Filings: submitting an annual return (MGT-7) and financial statements (AOC-4) to the MCA.
ii) Income Tax Return: Submitting the ITR-6 by the deadline.
iii) Statutory Audit: A chartered accountant's mandatory examination of financial accounts.
iv) Board sessions: One board meeting per quarter, with a minimum of four sessions annually.
v)An annual general meeting: or AGM, is held once a year, usually within six months of the conclusion of the fiscal year.
2. What consequences result from non-compliance?
Serious consequences for noncompliance include:
i) AOC-4 late filing costs ₹100 per day.
ii) MGT-7 late filing costs ₹100 per day.
iii) Penalties for failing to file income taxes can reach ₹10,000, plus interest.
iv) Penalties of up to ₹1 lakh are imposed for failing to maintain statutory registers.
3. Does a Private Limited Company have to register for GST?
Registration for GST is required if:
i) Over 40 lakh rupees is the turnover (service providers earn 20 lakh rupees).
ii) The business engages in interstate commerce.
iii) It sells on online marketplaces such as Amazon, Flipkart, and others.
4. What is the annual filing deadline?
i) AOC-4 (Financial Statements): October 30, following the conclusion of the fiscal year.
ii) MGT-7 (Annual Return): November 30th, following the conclusion of the fiscal year.
iii) Income Tax Return (ITR-6): October 31 (in the event of a tax audit).
5. Is a statutory audit necessary for a private limited company?
Yes, regardless of turnover, statutory audits are required. A chartered accountant must be appointed by each business in order to audit its books and submit financial statements.
6. If a private limited company isn't operating, can it be closed?
In accordance with Section 248 of the Companies Act of 2013, a company may be shut down via Voluntary Strike-off or Fast Track Exit (FTE) Mode.
7. Is it possible for a Private Limited Company to borrow money?
A Private Limited Company is able to borrow money from:
i) Directors of NBFCs and Banks
ii) Shareholders (with some restrictions)
iii)On the other hand, public loans are not allowed.